(c) Daisy Co
(i) Quality of audit work
– Determine that Daisy Co is significant due to special circumstances
– Goodwill relating to Daisy Co likely to be overstated – not identified by audit manager
– Cannot rely solely on component auditor’s opinion
– Further work required by ISA 600 including additional work on the balance identified as high risk
– Further impacts may not have been identified e.g. impairment of other assets
– Impact on other group components and group going concern should be evaluated
– Lack of audit manager’s professional skepticism and increased audit risk
(ii) Further actions or procedures
– Request working papers of Foxglove & Co for review
– Perform additional procedures relating to the regulations and potential impairment in individual
financial statements of Daisy Co (max 2 marks for specific procedures)
– Extend audit procedures at group level on goodwill impairment and going concern (max 2 marks
for specific procedures)
Maximum 9
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Maximum 25
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